Surveys Show Teens Failing at Financial Literacy
You know your teens can be illogical, unreasonable, and occasionally malodorous, but isn't it at least reasonable to assume they know the basics about money?
Apparently not. Surveys show that teens are failing at financial literacy. And while financial institutions like PricewaterhouseCoopers are investing significant resources in changing that, the problem is persisting.
From those in a position to know best—personal finance and business education teachers—here are five of the most gaping holes in teens' money knowledge.
1. Bank account basics. "My students had no idea how to figure out online banking," said Keith Newman, a personal finance teacher at Bodine High School for International Affairs in Philadelphia. Part of the problem, he said, is that there are no high-quality, up-to-date teaching tools to help students learn about bank accounts.
2. Budgeting. Students' "parents just hand them money, and they just burn through it," said Newman.
3. The power of compounding. Maggie Wohltmann, a business education teacher at Teaneck High School in New Jersey, likes to explain to her students that they all have the potential to be millionaires someday—but the odds of reaching that goal increase sharply if they save early.
4. Keeping credit reports clean. Many teens are stunned to learn that financial behavior over an extended period will affect their ability to borrow money or even obtain a credit card.
5. Rainy day savings. Whether teens come from affluent households or more modest ones, the idea of putting money away in case something happens if often novel, teachers say. "Savings shock them," said Newman. "In the end, they're pretty shocked at what they're left with" after taxes, and "what they need to save," said Kim Zocco, a business education teacher at Archbishop Edward A. McCarthy HIgh School in Southwest Ranches, Florida.